CITY (CNNfn) - Autotote Corp., a provider of computerized wagering equipment, agreed to acquire Scientific Games Holdings Corp., a supplier of lottery products, for about $310 million in cash.|
Autotote (TTE: Research, Estimates) will pay $26 cash for each Scientific Games (SG: Research, Estimates) share. That's a 41 percent premium from Scientific Games' Thursday closing price of $18.4375.
In morning trading, Autotote's shares climbed 5/16 to 3- 13/16, while Scientific rose 5-1/8 to 23 9/16.
David Pye, Autotote's vice president, said consolidation in the gaming industry prompted the deal. "Scientific is a big player in paper tickets," he said, describing the pieces of the paper a bettor gets when wagering on a lottery. "They have an almost 70 percent market share in the U.S."
The combined entity will have revenue of $450 million, Autotote said. Olivetti has issued a commitment letter for $100 million of stock that will result in a 30 percent stake in the entity.
Scientific offers online lottery and instant paper lottery tickets available through local stores. Autotote said it plans to combine its online services with Scientific's products.
The deal, which is subject to approval by Scientific shareholders, is expected to be completed by July, Pye said.
Separately, for the second quarter ending April 30, Autotote reported net income of $2.3 million, or 6 cents a diluted share, compared to $572,000 or 2 cents a diluted share, for the same quarter a year ago. Autotote exceeded First Call estimates of 2 cents a share for the second quarter.
Autotote said second quarter operating revenue was $51.2 million, $1.9 million less than the $53.1 million reported for the same quarter in 1999.